- Aug 04, 2020
- Chinese Consumers
Dr. Shen: Positive Consumption Growth is Important for China's Economy in H2 2020
by Vivian Yang
“Promoting consumption to achieve positive growth should be a key consideration in the second half of the year. The crux of the matter is how to enhance the income level of low-and middle-income groups, especially migrant workers, and to ensure the stability of employment and key market players,” said Dr. Jianguang Shen, Chief Economist of JD Digits at the China Wealth Management 50 Forum which is held online on August 3rd.
The Forum was under the theme of “Mid-Term Outlook: Current Macro Situations and Economic Trends”, with participants from the government, academia and business, to identify challenges and give policy advice on China’s economic development. Dr. Shen was invited to give a speech at this forum.
Based on JD’s big data on consumption, Shen pointed out three changes of lower-income people.
- First, consumption data in June showed that people in higher-tier cities (1st to 3rd tiers) spent more than those from the lower-tier cities (4th to 6th tiers), which is a major departure from the consumption trend prior to the pandemic. This may be because under the impact of COVID-19, middle-and low-income people hired by SMEs were hit harder than high-income people who mostly work for big companies or high value-added tech industries.
- Second, based on the population migration data, many migrant workers and rural labor forces from the lower-tier cities have not returned to higher-tier cities. People who moved out of the 1st tier cities to the 4th to 5th tier cities during the pandemic period account for more than 50% of total migrants.
- Third, consumption data showed that expenditure of higher-income groups on consumer electronics increased during the pandemic and people purchase more telecommunications devices to work from home. But remote work is not an option for many lower-income people as they won’t spend or cannot afford to spend on these items.
Considering all of this, Shen suggested to increase income subsidies for migrant workers in the second half of 2020.
The China Wealth Management 50 Forum (CWM50) is a non-governmental and non-profit academic think tank based in Beijing. It is dedicated to building a premium platform for professionals who are interested in the Chinese wealth management industry. The platform aims to facilitate the exchange of theories, thoughts, innovations, and experiences.